Trump just took credit for the stock market's huge rally (Again)

By Chris Nagi and Justina Lee Step aside analysts, US President Donald Trump knows why stocks are at an all-time high. Speaking to reporters on Air Force One over the weekend, after the S&P 500 closed Friday at fresh record, Trump said: "The reason our stock market is so successful is because of me. I’ve always been great with money, I’ve always been great with jobs, that’s what I do." It’s not the first time the president has claimed credit for a rally that has seen US stocks jump more than 20 per cent in the past year, though it may be the most blatant. Tax reform and fiscal stimulus hopes helped propel American equities in the wake of Trump’s election win, but certainty that the Republicans will be able to push through their legislative agenda has since dwindled. To analyze Trump’s contention, it helps to examine how earnings expectations have changed since before he was elected. In short, they haven’t. Profits in the S&P 500 Index will total $129.40 a share in 2017 and $145.70 next year, according to analyst projections compiled by Bloomberg from thousands of individual company estimates. Four days before the presidential vote, the forecasts were roughly the same -- $131.30 for 2017 and $146.40 for the following year. So if you believe earnings drive share prices, not much suggests Trump has improved the market’s underpinning. At the same time, the president could argue he’s done nothing to get in the way of last year’s estimates coming true. And that in itself is an accomplishment. Analysts, who tend to reduce their annual earnings forecasts as the year progresses, have cut their current-year projections by the smallest amount in at least five years, data compiled by Bloomberg show. And Trump has overseen an expansion in valuations, with the S&P 500 trading at 21.8 times profits, from 20 before his election. "This year US corporate earnings have met or exceeded expectations, so I think it’s the global macro recovery that’s been pushing up US or worldwide equity markets," said Thomas Kwan, chief investment officer at Harvest Global Investments Ltd. in Hong Kong. When it comes to the White House, "now it seems like they either won’t do anything or there’ll be a small tax cut, but in terms of other policies, it doesn’t look like there’ll be an obvious effect on the US economy or markets.” The S&P 500 just capped the longest stretch of weekly gains since 2013 as Apple Inc results and strong services sector data added to optimism in the economy. US equities are now worth an unprecedented $28.7 trillion, more than three times the size of the next biggest stock market (mainland China), and up by $3.5 trillion this year, Bloomberg data show. The White House’s twists and turns have at times rocked US and even global stocks this year. The market followed the fortunes of Trump’s failed health care reform, which was seen as a bellwether for his ability to enact key proposals such as tax cuts. Scandals such as investigations into Russian interference and Trump’s response to the Charlottesville violence also weakened expectations for any market-friendly policies, undermining equities briefly. More recently, speculation over Trump’s appointment of the next Federal Reserve Chair -- which at times took on the quality of a reality show -- has also dominated markets. Powell, Trade And yet, his choice of Jerome Powell is seen as cementing a similar approach to monetary policy as that of Janet Yellen, an ally to stock investors. And equities have probably benefited from Trump’s more conciliatory approach to trade relations with China and others, at least compared to campaign-trail rhetoric. Now, the focus is on whether the Republican Party -- led but also divided by Trump -- will be able to pass a tax cut package that includes lowering the corporate tax rate to 20 per cent from 35 per cent. "From the beginning of this year till very recently, the market basically progressively reduced expectations for those tax cuts, but stocks are up nonetheless," said Ken Peng, an investment strategist at Citi Private Bank in Hong Kong. As the policy priorities -- and the periodic bouts of turbulence -- emerged from the White House this year, earnings beats and positive profit outlooks continued unabated. iPhone Fever Apple briefly became the US’s first $900 billion company last week as its stores were inundated with customers trying to get their hands on the new iPhone X, demand that’s underpinning the firm’s prediction of record sales in the Christmas quarter. Amazon.com Inc.’s third-quarter profit of 52 cents a share topped analysts’ estimates by a record 1,305 per cent. And Caterpillar Inc., often considered a bellwether for the global economy, last month made its third-straight increase in annual revenue projections. "After about a year of earnings beating expectations and relatively high expectations now, naturally people will expect slower earnings growth," said Harvest’s Kwan. Still, "any slowdown in earnings growth will be mild."

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NEW YORK: The S&P 500 closed positive for the year on Friday for the first time in 2016 as the US Federal Reserve's dovish tone and a strengthening economic outlook compelled investors to take on more risk. In part, the rally was a continued reaction to the Fed's move on Wednesday, in which it scaled back expectations for the number of rate hikes in the coming months. Major indexes gained for five weeks in a row and the Dow closed higher every day this week. "It was a huge gift to the market," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

ROME — Election projections in Italy early Monday showed a centre-right coalition that includes an anti-migrant party edging past the populist 5-Star Movement, but no single bloc or party with the support to win a majority in Parliament.
If confirmed by official results, the outcome could set the stage for weeks of political haggling to forge a new government

Global stocks and US equity futures roared upward to new record highs to start the second-to-last week of the year, boosted by optimism over a Republican agreement on the shape of U.S. tax cuts aimed at lifting growth; incidentally this is the 6th consecutive day that the "tax bill" has been priced in by the market, and according to cynics, 6th consecutive week and/or 6th month. Meanwhile, the dollar dropped and Treasuries headed lower.

After yesterday's violent gap up in stocks across the globe in response to the "expected" outcome from the French election, today the risk on sentiment has continued if to a lesser extent, with stocks in Europe, Asia all rising while S&P futures point to a higher open. Yen, gold decline, while the euro traded as high as 1.09 this morning before fading some gains; oil is up modestly.

NEW YORK: An up week in the S&P 500 Index did little to alleviate the frustration of US investors who have now watched stocks go nowhere for a full year. Yes, the S&P 500 rose over the last five days, halting a three-week slide that had been the longest since January. But the rally didn't come close to ending a 12-month fallow period that the index has spent stuck below its all-time high. The stretch is one of the longest in the history of US bull markets.

TORONTO — The Toronto stock market closed in the red on the final day of January trading on Friday as worries about European deflation and currency troubles in emerging markets persuaded investors to step back after a big run-up.
However, markets were well off earlier lows as the S&P/TSX composite index dropped 40.34 points to 13,694.94.
The Canadian dollar advanced 0.22 of a cent to 89.78 cents US as November gross domestic product rose 0.2%, in line with forecasts.

Washington (AFP) - US Senator Mary Landrieu, one of the last standing elected Deep South Democrats, lost her bid for re-election in Louisiana, further clinching Republicans' dominance in the Senate following mid-term elections last month.

David Moenning submits: I have spent a fair amount of time the past two days watching football and simultaneously slogging through the expected year-end crush of 2011 outlooks, forecasts, and other crystal ball projections. As a public service I will try and keep this as brief as possible and share what I consider to be the most salient findings.